Residency – the domicile test
The domicile test is the first statutory test. You are an Australian resident if your domicile is in Australia, unless we are satisfied that your permanent place of abode is outside Australia.
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What is a domicile?
Your domicile is the place that is:
- considered by law to be your permanent home
- usually something more than a residence.
You may have no fixed place of abode but under the law you will always have a domicile. You can only have one domicile at the one time, whereas you may be resident in two or more places.
There are three basic types of domicile, as established by common law and statutes:
- Domicile by origin, which is attributed to everyone at birth. For example, a nuptial child adopts the domicile of its father, an ex-nuptial child that of its mother.
- Domicile by choice, which will be inferred by law, if there is both a change of residence and an intention of making the change permanently or at least indefinitely. Any person without a legal disability can have a domicile of choice.
- Domicile by operation of law, which is imposed by law. For example
- an infant's domicile is that of its parents and changes when the parent's domicile changes
- a married woman can acquire her own domicile, independent of her husband
- the age of capacity to have an independent domicile is fixed at
- 18 years old
- when the person marries.
In practice, if you are a resident who has always lived in Australia, you will retain a domicile here when you are absent overseas, unless you choose to permanently migrate to another country.
Permanent place of abode
The following meanings have been established through case law:
- permanent does not have the meaning of everlasting or forever, but is used in the sense of being contrasted to temporary or transitory
- your place of abode is your residence, where you live with your family and sleep at night.
When does this test apply?
The domicile test of residency usually applies where an Australian resident goes to work in an overseas country for an extended period of time.
In this situation:
- you may fail the resides test as you will be away for a lengthy period
- the absence would raise considerable doubt as to whether you are residing in Australia during that period
- it is a reasonable assumption that you will be overseas for a lengthy period you will normally set up some form of abode there
- unless there are other significant factors, such as family and financial ties remaining in Australia, it is usually a foregone conclusion that you do not reside in Australia.
However, you would normally have a domicile in Australia (unless you choose to change it) and therefore the domicile test can be applied. In doing so, the most important consideration will therefore be determining if you have a permanent place of abode abroad.
Determining your permanent place of abode
There are no hard and fast rules that can be used to determine your permanent place of abode. Taxation Ruling IT 2650: Income tax: residency - permanent place of abode outside Australia outlines some relevant factors that are used by the courts, tribunals and ATO in deciding such cases.
The relevant factors are:
- intended and actual length of stay overseas, including the continuity of that stay
- existence of an established home overseas
- existence of a residence in Australia (while overseas)
- family and financial ties.
You would not be considered to have adopted a permanent place of abode outside Australia and would therefore be considered an Australian resident under the domicile test if you:
- have no fixed or habitual place of abode overseas but move from one country to another
How the test works
There are two steps to this test:
- Determine your domicile
- If not in Australia, the domicile test is not satisfied.
- If in Australia, go to step two.
- Determine your permanent place of abode
- If not in Australia, the domicile test is not satisfied.
- If in Australia, you are considered an Australian resident for income tax purposes.
What to read or do next
For more general information about residency, read Your tax residency.
For information on the other three residency tests, read:
Taxation Ruling IT 2650: Income tax: residency - permanent place of abode outside Australia outlines some relevant factors that are used by the courts, tribunals and ATO in deciding which country is your permanent place of abode.
For other information about foreign employment income and residency, see:
If you need help applying this information to your own situation, you can contact us.
The domicile test is one of the tests used to determine if you are a resident of Australia for tax purposes.